Question

On January 1, Splash City issues $ 500,000 of 7% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. T. Bone Investment Company (TBIC) purchases all of the bonds in a private placement.

Required: Assuming the market interest rate on the issue date is 6%, TBIC will purchase the bonds for $ 549,001. 1. Complete the first three rows of an amortization table for TBIC. 2. Record the purchase of the bonds by TBIC on January 1 and the receipt of the first two semiannual interest payments on June 30 and December 31.